Aditya Birla Nuvo to merge with Grasim, hive off fin arm

After consolidating its garments business into a single entity last year, the USD 41-billion Aditya Birla Group today finalised plans to merge Aditya Birla Nuvo with flagship Grasim Industries and hive off financial services business into a separate entity.
The merger is scheduled to be completed by the first quarter of next fiscal, while the financial services business will be listed by June 2017.
The merged Grasim will create a behemoth with an aggregate turnover of Rs 59,766 crore and an EBITDA of around Rs 11,961 crore (as per March 2016 closing).
This will also make Grasim the top cement company with the largest selling brand (UltraTech), among the top 10 diversified NBFCs, among the top four private life insurers and the number 3 telecom operator, Aditya Birla Group Chairman Kumar Mangalam Birla told reporters here this evening.

"The boards today approved a composite scheme of arrangement between Aditya Birla Nuvo (ABNL) and Grasim. The merger will be a win-win for all, which is likely to be completed by the first quarter of 2017-18 and a subsequent demerger and listing of the financial services business in May-June 2017," said Birla.
He went on to add that the proposed restructuring will create one of the largest, well-diversified companies with a healthy mix of business with steady cash flows and long term growth opportunities. The demerger and listing of financial services business will unlock shareholder value.

With diverse businesses spanning manufacturing and services, the combined company provides a play on the nation's growth story, Birla said.

The transaction is subject to regulatory approvals, including the stock exchanges, High Courts of Madhya Pradesh and Gujarat, the Competition Commission and shareholders.
Under the merger plan, an ABNL shareholder will get three new equity shares of Grasim for every 10 equity shares of ABNL.
On the other hand, for demerger of financial services business into Aditya Birla Financial Services (ABSL), each Grasim shareholder (post-merger) will receive seven equity shares in ABFSL for every one share held in Grasim.
Birla pointed out that Grasim shareholders will get benefits like exposure to fast-growing sectors of financial services and telecom, diverse portfolio of businesses with leadership positions and long horizon of growth.

Similarly, ABNL shareholders will get benefits of direct exposure to businesses with strong free cash flow generation in cement and VSF businesses.
Shareholders will also have an option to invest in Grasim post-merger or directly into the operating companies of the group, he added.